Dave Michaels

Jean Eaglesham

A watchdog tasked with protecting investors by policing audits of public companies has slowed its work amid board infighting, multiple senior staff departures, and allegations that the chairman has created a “sense of fear,” according to a whistleblower letter and people familiar with the situation.

The Public Company Accounting Oversight Board, set up by Congress after the Enron Corp. and WorldCom Inc. accounting fiascoes of the early 2000s, oversees accounting firms that audit companies worth in total trillions of dollars. The...